Yahoo Finance Uranium to Rocket in a Bull Market? ETFs in Focus
Being an essential component in sustainable and reliable energy generation, uranium plays a crucial role in shaping the future of energy security. Growing interest in nuclear energy has led to an optimistic outlook for the commodity.
The increasing focus on finding alternative energy sources and diminishing global reliability on fossil fuels has resulted in a surge in demand for uranium. Given its pivotal role in the global energy landscape, uranium prices stand as a critical subject for investors and policymakers.
Surge in Clean Energy Interest
Growing energy concerns and the increasing need for dependable and eco-friendly energy sources are fueling a surge in demand for the commodity. With uranium being one of the cleanest ways to produce electricity, countries are restarting abandoned uranium mines to capitalize on the commodity’s growing demand.
With the world racing toward the goal of net-zero emissions by 2050, nuclear power is emerging as a crucial solution to bridge the energy deficit gap. Nuclear energy is not only clean and scalable but also reliable and tackles the intermittency problem faced by other sources of renewable energy like solar and wind.
Global investments in clean energy are expected to surpass $3 trillion in 2024, per the IEA, with $2 trillion being allocated toward renewables, nuclear power and low-emission fuels. Nearly two dollars are invested in clean energy for every dollar spent on fossil fuels, indicative of the increasing interest in clean energy (Read: Clean Energy ETFs Soar on Global Investment Surge).
Rising Demand Meets Supply Constraints
The growing supply-demand disparity further fuels the surge in uranium prices. Curtailed supply due to rising geopolitical tensions and the ban on Russian supplies by the United States increase the supply risk faced by the commodity.
However, driven by the surge in demand for the commodity, global economies are working to increase their uranium supply. According to IG, by 2030, China plans to build up to thirty nuclear power reactors, with the United States and Japan agreeing to triple their nuclear capacity by 2050.
Indicative of long-term demand for the commodity, Sweden has approved the construction of additional nuclear reactors, with India planning to increase its nuclear capacity.
Price Projection for the Commodity
Uranium price crossed the $100 per pound milestone in January 2024, for the first time in 17 years, building on the momentum which began in 2021. Driven by a combination of transition toward clean energy and constant supply challenges, uranium prices are expected to range between $94.66 and $105.2 throughout 2025, as per techopedia.
From 2026 to 2029, uranium prices are anticipated to rise annually, consistently remaining above the $100 mark, hitting $120.6 in 2029, driven by persisting supply deficits.
According to Times Tabloid, uranium prices as tracked by the Global Uranium ETF have surged 233%, outpacing the surge in copper and gold prices threefold, over the last five years.
AI Boosting the Need for Uranium?
With a surge in AI application and increased corporate spending, demand for data center capacity to support AI workloads also gets fueled. Data centers are energy-intensive and with AI applications consuming even more energy than traditional computing, most of the tech giants are transitioning to relying on renewable energy to support their power needs.
Driven by sustainability goals, the tech giants are increasingly exploring nuclear energy as a power source, with uranium remaining one of the most carbon-free methods of electricity generation (See: AI's Insatiable Energy Needs Boost Uranium ETFs).
According to IG, small nuclear reactors are being incorporated into data centers by Microsoft, with Amazon buying a nuclear-powered data center in the United States earlier this year.
ETFs in Focus
With demand projections for uranium looking promising, investors can use the following pure-play ETFs to capitalize on the metal’s growth trajectory.
The performance of the following funds over the past year is indicative of the momentum behind the surge in demand for uranium.
Global X Uranium ETF URA has gained 16.21% over the past three months and 73.06% over the past year.
Sprott Uranium Miners ETF URNM has gained 16.49% over the past three months and 94.11% over the past year.
VanEck Uranium+Nuclear Energy ETF NLR has gained 17.34% over the past three months and 66.69% over the past year.
Sprott Junior Uranium Miners ETF URNJ has gained 17.24% over the past three months and 100.56% over the past year.
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VanEck Uranium+Nuclear Energy ETF (NLR): ETF Research Reports
Global X Uranium ETF (URA): ETF Research Reports
Sprott Uranium Miners ETF (URNM): ETF Research Reports
Sprott Junior Uranium Miners ETF (URNJ): ETF Research Reports
